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Great River Federal Credit Union on Planning for Long-Term Care

St. Cloud Times (November 13, 2016) - The American population is growing older. A July 2016 report by the Pew Charitable Trusts found that more than 6 million Americans are 85 and older. By 2030, there will be 9 million people aged 85 and older, and, by 2050, that number will grow to nearly 18 million.

Aging brings specialized needs, especially when it comes to assisting yourself (or a loved one) with basic daily living activities. Long-term care is the range of services a person may need to support his or her personal care needs. Often, it is not specialized medical care, but skilled supportive care to assist a loved one with what many of us take for granted.

To assess the need for “long term care”, we have to understand the activities of daily living (ADL’s). “Anecdotally, it really comes down to everyday skills: Can you get out of bed for breakfast? Can you get yourself to the toilet? Eat? Are you continent? Can you bathe yourself?” asks Jessica Filiaggi, Financial Advisor at Great River Financial and Investment Services in St. Cloud. “If you or your loved one can’t perform any two of those things, it is likely that your quality of life is being impacted, and will potentially create a negative impact on a loved one as well.”

Skilled services don’t necessarily require a move. “A lot of people think nursing home right away, but that’s not an appropriate assumption,” says Filiaggi. “A lot of people receive skilled care at home prior to entering a long term assisted living facility.”

Staying in one’s own home can be comforting, affirming, and it can be cheaper. “Often, taking advantage of well thought out home care can save assets in the long run,” says Filiaggi, “Especially when the individual needs help with bathing and eating, which can be timed and do not require around the clock assistance.”

The United States Department of Health and Human Services’ most recently published numbers six years ago and cite nearly $6200/month for a semi private room in a full time nursing facility vs. $21/hour for a home health aide. Filiaggi tells her clients to plan for approximately $5,000 to $9,000 a month for full time care and that you will need services for an average of three years.

“Long-term care can be a massive expense that can completely blow out your financial plans and take over your income,” says Filiaggi. “For many clients, I begin the conversation when they are in their mid-40s, as they are doing income planning for retirement - to talk about long-term care,” says Filiaggi. “If you have assets that you are ear-marking for retirement, paying for long-term care cost can wipe that out. You can begin covering that risk.”

Filiaggi recommends that people start the conversation with their financial advisor. As the population changes and long-term care needs change, insurance companies are responding with hybrid financial products that combine the qualities of other insurance, such as life insurance or annuities, with a long-term care policy. “You are still buying a long-term care benefit with an annual premium but also building up a death benefit,” says Filiaggi. “Generally, you don’t have as good coverage as a straight-up long-term care policy, but it could be less expensive, too.”

“It’s important to look at all the options and talk to a financial advisor about what makes the most sense for your situation,” says Filiaggi. “It’s very important to weigh the monthly premiums against the potential impact on your finances that long-term care needs could create.”

Securities and Investment Advisory services are offered through Cetera Advisor Networks LLC, member FINRA & SIPC. GRFIS and GRFCU are not affiliated with Cetera Advisor Networks LLC.
Not NCUA Insured. May Lose Value. Not a Credit Union. Not a Deposit. Not Insured by an Federal Agency.